The CFO of Red Oyster Seafood Company is trying to determine the companys WACC He has determined that the companys before tax cost of debt is 10 20 The company currently has $100,000 of debt, and the CFO believes that the book value of the companys debt is a good approximation for the market value of the companys debt The firms cost of preferred stock is 11 40 , and the book value of preferred stock is $10,500 Its cost of equity is 14 30 , and the company currently has $85,000 of common equity on its balance sheet The CFO has estimated that the firms market value of preferred stock is $30,000, and the market value of its common equity is $140,000 If Red Oyster is subject to a tax rate of 40 , Red Oyster Seafood Companys WACC is (Hint Round your answer to two decimal places )

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Posted on Oct 02, 2024

The CFO of Red Oyster Seafood Company is trying to determine the companys WACC. He has determined that the companys before-tax cost of debt is

The CFO of Red Oyster Seafood Company is trying to determine the companys WACC. He has determined that the companys before-tax cost of debt is 10.20%. The company currently has $100,000 of debt, and the CFO believes that the book value of the companys debt is a good approximation for the market value of the companys debt.

	The firms cost of preferred stock is 11.40%, and the book value of preferred stock is $10,500.
	Its cost of equity is 14.30%, and the company currently has $85,000 of common equity on its balance sheet.
	The CFO has estimated that the firms market value of preferred stock is $30,000, and the market value of its common equity is $140,000.

If Red Oyster is subject to a tax rate of 40%, Red Oyster Seafood Companys WACC is ? (Hint: Round your answer to two decimal places.)